Usually, when one insider buys stock, it might not be a monumental event. But when multiple insiders are buying like they did in the case of Marks Electrical Group PLC (LON:MRK), that sends out a positive message to the company’s shareholders.
While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.
See our latest analysis for Marks Electrical Group
Over the last year, we can see that the biggest insider purchase was by CFO & Director Joshua Ellis Thomas Egan for UK£58k worth of shares, at about UK£0.70 per share. That means that even when the share price was higher than UK£0.53 (the recent price), an insider wanted to purchase shares. Their view may have changed since then, but at least it shows they felt optimistic at the time. In our view, the price an insider pays for shares is very important. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price. Notably Joshua Ellis Thomas Egan was also the biggest seller.
Over the last year, we can see that insiders have bought 184.13k shares worth UK£129k. But insiders sold 115.13k shares worth UK£81k. In the last twelve months there was more buying than selling by Marks Electrical Group insiders. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
Marks Electrical Group is not the only stock that insiders are buying. For those who like to find small cap companies at attractive valuations, this free list of growing companies with recent insider purchasing, could be just the ticket.
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. I reckon it’s a good sign if insiders own a significant number of shares in the company. Marks Electrical Group insiders own 74% of the company, currently worth about UK£41m based on the recent share price. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
The fact that there have been no Marks Electrical Group insider transactions recently certainly doesn’t bother us. But insiders have shown more of an appetite for the stock, over the last year. With high insider ownership and encouraging transactions, it seems like Marks Electrical Group insiders think the business has merit. While it’s good to be aware of what’s going on with the insider’s ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. At Simply Wall St, we found 1 warning sign for Marks Electrical Group that deserve your attention before buying any shares.
Of course Marks Electrical Group may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions of direct interests only, but not derivative transactions or indirect interests.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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